Bankruptcy Filing To Escape Sexual Harassment Awards
Stands

Northern District of New York Bankruptcy Judge Robert
Littlefield Jr said since the bankruptcy filer, David
Busch, did not intended to cause psychological or economic
harm with his alleged sexual harassment, he can file for
bankruptcy as a legal means to avoid paying out a $430,232
judgment against him.
Even though Judge Littlefield ruled in favor of
Busch, he still said the determination results in a “grave
injustice” that seemingly will “add insult to injury,”
according to a New York Law Journal report.

To arrive at this decision, Littlefield turned to the
US Supreme Court decision
Kawaauhau v. Geiger
.
In that case, the high court applied §523(a)(6) of
the Bankruptcy Code to a medical malpractice case, which
states debts arising from “willful and malicious injury by
the debtor” are not dischargeable in bankruptcy.
Thus, a medical malpractice award predicated on negligent
or reckless conduct does not meet the standard for denying
discharge, allowing a doctor facing such a medical
malpractice judgment to eliminate that debt in
bankruptcy.

Following this ruling, Busch filed for Chapter 7
bankruptcy in an apparent attempt to escape a default
judgment in a sexual harassment matter.
The default judgment came after Jacqueline
Sanger, a former employee of Busch at Albany Air Systems
Inc, accused him of subjecting her to persistent
propositions, lewd comments and offensive physical contact.
Sanger filed a lawsuit claiming sexual harassment by Busch,
which Busch ignored.
Subsequently, US District Judge David Hurd entered a
default judgment on liability.

Bankruptcy Hearing

In lieu of an appeal of the award, Busch filed for
bankruptcy.
At the bankruptcy proceeding, Busch denied sexually
harassing Sanger. She did not testify, relying on a
transcript of her testimony from the previous case.

With this evidence, Littlefield found “Even if the
acts of sexual harassment occurred exactly as alleged …
there is no evidence that the Debtor ever intended to
cause any of the injuries recounted by the Plaintiff in
the District Court Action.”

Thus, “Title VII claimants who seek to except their
liquidated sexual harassment judgments from debtors’
discharges will inevitably face the difficult challenge
of proving that their harassers intended to cause their
actual injuries.”